The biotech industry is poised for long-term growth due to growing healthcare needs, a rapidly aging population, the need for personalized treatments and therapies, and the use of advanced technologies to accelerate drug development.
However, it could be wise to wait for a better entry point in TG Therapeutics, Inc. (TGTX) and Galapagos NV (GLPG). On the other hand, investors could consider buying fundamentally strong BioMarin Pharmaceutical Inc. (BMRN) and United Therapeutics Corporation (UTHR).
But before delving into the fundamentals of these stocks, let’s explore what’s shaping the industry prospects.
The biotech industry played a crucial role during the pandemic by coming up with vaccines and therapies to combat COVID-19. Biotech companies are known to spend significantly on research and development (R&D), which allows them to provide solutions to age-old problems, address unmet medical needs, and improve patient outcomes.
Biotech companies use cutting-edge technologies like artificial intelligence, big data analytics, and machine learning to accelerate drug discovery and vaccine development, identify targeted diseases, come up with breakthrough treatments, and enhance clinical trials. The use of artificial intelligence in the biotechnology market is anticipated to grow at a CAGR of 29.7% until 2032.
The sector is well-positioned to grow thanks to the promise it holds for providing a healthier future. The global biotechnology market is expected to grow at a CAGR of 12.8% to reach $3.21 trillion by 2030.
Moreover, investors’ interest in biotech stocks is evident from the VanEck Vectors Biotech ETF’s (BBH) 11.8% returns over the past six months.
With these favorable trends in mind, let’s delve into the fundamentals of the featured Biotech stocks, beginning with the stocks to buy.
Stocks to Buy:
BioMarin Pharmaceutical Inc. (BMRN)
BMRN develops and commercializes therapies for people with severe and life-threatening rare diseases and medical conditions. The company’s commercial products include Vimizim, Naglazyme, Kuvan, Palynziq, Brineura, Roctavian, Aldurazyme, and Voxzogo.
On October 20, 2023, BMRN announced that the U.S. Food and Drug Administration (FDA) approved the supplemental New Drug Application (sNDA) for VOXZOGO® (vosoritide) to increase linear growth in pediatric patients with achondroplasia with open epiphyses (growth plates).
This indication is approved under accelerated approval based on an improvement in annualized growth velocity. Previously, VOXZOGO was indicated for children who were 5 years of age and older. This expanded indication now includes children of all ages with open growth plates.
In terms of the trailing-12-month EBIT margin, BMRN’s 5.19% is 474.2% higher than the 0.90% industry average. Likewise, its 9.61% trailing-12-month EBITDA margin is 78% higher than the industry average of 5.40%. Furthermore, the stock’s 4.48% trailing-12-month Capex/Sales is 4.9% higher than the industry average of 4.27%.
For the fiscal third quarter that ended September 30, 2023, BMRN’s revenues increased 15% year-over-year to $581.33 million. Its non-GAAP income increased 72.1% year-over-year to $89.50 million. The company’s income from operations came in at $25.66 million, compared to a loss from operations of $2.42 million in prior-year quarter.
Additionally, its non-GAAP EPS came in at $0.46, registering an increase of 70.4% over the prior year quarter.
Analysts expect BMRN’s revenue and EPS for the quarter ended December 31, 2023, to increase 18.3% and 22.5% year-over-year to $635.81 million and $0.44, respectively. Over the past six months, the stock has gained 13.4% to close the last trading session at $99.
BMRN’s solid prospects are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Growth and a B for Value. Within the Biotech industry, it is ranked #21 out of the 346 stocks. Beyond what we have stated above, we have also rated BMRN for Momentum, Stability, Sentiment, and Quality. Get all BMRN ratings here.
United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company that engages in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening diseases globally. Its commercial therapies include Remodulin, Tyvaso, Tyvaso DPI, Remunity Pump, Orenitram, Unituxin, and Adcirca.
In terms of the trailing-12-month gross profit margin, UTHR’s 88.87% is 56.4% higher than the 56.84% industry average. Likewise, its 26.89% trailing-12-month levered FCF margin is significantly higher than the industry average of 0.29%. Furthermore, the stock’s 8.67% trailing-12-month Capex/Sales is 103.2% higher than the industry average of 4.27%.
UTHR’s total revenues for the third quarter that ended September 30, 2023, increased 18.1% year-over-year to $609.40 million. The company’s net income grew 11.8% year-over-year to $267.60 million. Its operating income increased 4% over the prior year quarter to $327 million. Also, the company’s net income per share rose came in at $5.38, representing an increase of 9.6% year-over-year.
Street expects UTHR’s revenue and EPS for the quarter ended December 31, 2023, to increase 17% and 58.9% year-over-year to $574.96 million and $4.24, respectively. The company has topped the Street EPS estimates in three of the trailing four quarters, which is impressive.
Over the past six months, the stock has gained 9.1% to close the last trading session at $231.04.
It’s no surprise that UTHR has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system.
UTHR has a B grade for Value, Sentiment, and Quality. It is ranked #8 in the same industry. In addition to the POWR Ratings highlighted above, one can access UTHR’s ratings for Growth, Momentum, and Stability here.
Stocks to Hold:
TG Therapeutics, Inc. (TGTX)
TGTX is a commercial-stage biopharmaceutical company focusing on the acquisition, development, and commercialization of novel treatments for B-cell diseases. It provides BRIUMVI, and its development pipeline comprises Umbralisib, TG-1701 and TG-1801. Its research pipeline includes various investigational medicines.
On January 9, 2024, TGTX announced that it has entered into an agreement with Precision BioSciences, Inc. to acquire a worldwide license to Precision’s Azercabtagene Zapreleucel (azer-cel), an allogeneic CD19 CAR T cell therapy program for autoimmune diseases and all other non-oncology indications.
Michael S. Weiss, Chairman and Chief Executive Officer of TGTX stated, “We are excited to expand our autoimmune portfolio and leverage our robust drug development and commercialization expertise in partnering with Precision on this CAR T program. We look forward to exploring azer-cel’s potential to be a meaningful therapy for patients with various autoimmune disorders with a target IND filing mid-2024.”
In terms of the trailing-12-month gross profit margin, TGTX’s 96.69% is 70.1% higher than the 56.84% industry average. Likewise, its 0.69x trailing-12-month asset turnover ratio is 76.5% higher than the industry average of 0.39x. On the other hand, its negative 9.85% trailing-12-month EBITDA margin compares to the 5.40% industry average.
For the fiscal third quarter, which ended September 30, 2023, TGTX’s revenue increased substantially year-over-year to $165.82 million. Its operating income came in at $114.78 million, compared to an operating loss of $34.96 million in the prior year quarter.
Additionally, its net income stood at $113.93 million, compared to a net loss of $35.82 million in the prior year quarter. Its EPS came at $0.73, compared to a loss per common share of $0.26 in the year-ago quarter.
Street expects TGTX’s revenue for the quarter ended December 31, 2023, to increase significantly year-over-year to $38.66 million. Over the past three months, the stock has gained 173.8% to close the last trading session at $21.30.
TGTX’s POWR Ratings are consistent with this uncertain outlook. It has an overall rating of C, translating to Neutral in our proprietary rating system.
It has a C grade for Value and Sentiment. It is ranked #37 out of 346 stocks in the Biotech industry. Click here to see the other ratings of TGTX for Growth, Momentum, Stability, and Quality.
Galapagos NV (GLPG)
Headquartered in Mechelen, Belgium, GLPG is an integrated biopharmaceutical company that engages in the discovery, development, and commercialization of various medicines for high unmet medical needs. Its pipeline products include filgotinib, GLPG3667, GLPG5101 and GLPG5201, CD19 CAR-T.
On January 2, 2024, GLPG and Alfasigma S.p.A. announced that they have signed an agreement to transfer GLPG’s Jyseleca® (filgotinib) business to Alfasigma, marking a significant milestone in GLPG’s transformation into an innovative biotechnology company with a best-in-class research and development pipeline aimed at addressing high unmet patient needs in immunology and oncology.
In connection with the transaction, GLPG expects to realize substantial savings ranging between €150 million and €200 million and will prioritize investments in its existing technology platforms of small molecules, CAR-T cell therapies and biologics, as well as the scale-up of its innovative decentralized CAR-T manufacturing network.
In addition, GLPG plans to invest in licensing and acquisition opportunities ranging from late preclinical to mid-stage clinical assets in its strategic therapeutic areas to drive value across its pipeline. GLPG will receive a €50 million upfront payment, potential sales-based milestone payments totaling €120 million and mid-single to mid-double-digit royalties on European sales.
On January 3, 2024, GLPG announced that it entered a strategic collaboration with BridGene Biosciences, Inc. to discover and develop new precision medicines against clinically validated oncology targets by leveraging GLPG's expertise in small molecule drug discovery and translational research along with BridGene's proprietary IMTAC chemoproteomics platform.
GLPG will pay up to $27 million in upfront and preclinical milestone payments to BridGene, with potential additional payments exceeding $700 million in clinical and commercial milestones on the achievement of the success of the program.
The collaboration provides a significant boost to GLPG's early-stage oncology precision medicine pipeline and reinforces its commitment to addressing high unmet medical needs in cancer treatment.
In terms of the trailing-12-month gross profit margin, GLPG’s 11.60% is 79.6% lower than the 56.84% industry average. Likewise, its 0.12x trailing-12-month asset turnover ratio is 70.5% lower than the industry average of 0.39x.
GLPG’s total net revenues for the nine months ended September 30, 2023, increased 9.4% year-over-year to €448.85 million ($491.45 million). Its net profit came in at €54.14 million ($59.27 million), compared to a net loss of €10.78 million ($11.80 million) in the prior-year period. Its income per share stood at €0.82, compared to a loss per share of €0.16 in the year-ago period.
Additionally, its total comprehensive income attributable to owners of the parent came in at €54.46 million ($59.62 million), compared to a total comprehensive loss attributable to owners of the parent of €10.79 million ($11.81 million) in the year-ago period. Its operating loss narrowed 86% year-over-year to €18.95 million ($20.75 million).
GLPG’s revenue for the quarter ended December 31, 2023, and it is expected to increase 3.5% year-over-year to $104.31 million. It surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive. Over the past three months, the stock has gained 21.6% to close the last trading session at $42.22.
GLPG’s bleak prospects are reflected in its POWR Ratings. It has an overall rating of C, which translates to Neutral in our proprietary rating system.
It has a C grade for Growth, Stability, Sentiment, and Quality. It is ranked #32 in the same industry. To see the other ratings of GLPG for Value and Momentum, click here.
What To Do Next?
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BMRN shares were trading at $95.68 per share on Tuesday afternoon, down $3.32 (-3.35%). Year-to-date, BMRN has declined -0.77%, versus a -0.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
Are These 4 Biotech Stocks Worth Buying in 2024? StockNews.com
